The Next Bubble: Alternate Energy?

First we had the .COM bubble then we had the housing bubble but this article points out what may well be the next one.

There is one industry that fits the bill: alternative energy, the development of more energy-efficient products, along with viable alternatives to oil, including wind, solar, and geothermal power, along with the use of nuclear energy to produce sustainable oil substitutes, such as liquefied hydrogen from water. Indeed, the next bubble is already being branded. Wired magazine, returning to its roots in boosterism, put ethanol on the cover of its October 2007 issue, advising its readers to forget oil; NBC had a “Green Week” in November 2007, with themed shows beating away at an ecological message and Al Gore making a guest appearance on the sitcom 30 Rock.

What is interesting is that each bubble that we have had in the 2000s might be able to be picked up by looking for so-called "bubble signs." The .COM bubble was supposed to be the triumph of the Internet economy and how it will "change our lives" with all its new economy vs. old economy BS. I think that when Pets.com paid millions for their SuperBowl ad when they had no revenue to speak of was a sure bubble sign. Or you could site Peapod.com's idea of delivering groceries (which which have always had a notoriously low margin) to your home as another bubble sign.

Then the housing bubble cam along and created the idea that your home is your best investment so you should buy multiple homes and "flip them and become a real estate millionaire." I site the rise of the Kiyosaki Method and the mania surrounding home flipping as a sure bubble sign. Also seeing a mortgage broker on every block is a sure tip off as well.

So this next bubble could very well be "alternative energy" bubble. This one is even more insidious because it is a get-rich-quick scheme like most bubbles mixed with a feel good message of helping the environment. That feel-good message will trap a lot of investors because they will be seen as preventing global warming when they invest in that switchgrass to ethanol company with no revenue that spends millions on advertising. The idea of promoting social consciousness will end up losing people alot of money when this bubble pops.